Employee Incentive Plans for a High Turnover Environment

Employee incentive programs. Bonus programs. Do they work, and really provide a good return on investment?

I’m sold on them. I have successfully used incentives and bonus programs in my own businesses - particularly in my first company. But, that was a medical electronics company with a stable workforce. What if you're in retail or other high-turnover, short attention span industries – maybe with a teenage workforce?

Most bonus programs run all year, with either a quarterly or year-end payout. But if you have a high employee turnover rate, the incentive you're trying to create goes out the door with each employee who goes away. Even the folks who stay until the end of the year may not have a long-range attitude, so it can be very difficult to get their attention and to use bonuses to accomplish a change in their performance.

Regardless of your industry and regardless of the reasons why a year-long bonus plan hasn't worked for you, try a shorter-range plan to get tangible results.

I recommend a monthly theme or focus (choose the word that you prefer) with corresponding targets and rewards. Here are two examples:

April’s Theme: Customer Satisfaction Surveys
Target: Collect at least 50 surveys this month
Reward: Pizza & soda lunch

May’s Focus: Flyer Offer Response
Target: At least 100 customers redeem the offer on this month's flyer
Reward: $25 gift card for each employee

The possibilities are endless, but here are some commonalities and issues to consider:

• If you have more than one location, the target and reward can be for the entire operation, or for each location. In other words, one office might win and the other might not. A little friendly competition between the locations is OK as long as it remains positive. You'll have to decide how to handle rewards for employees who move between multiple locations. Inside each office or location, avoid competition and work to foster an environment of cooperation and teamwork.
• Once you achieve a target and move on to the next month's focus, it doesn't mean your employees can say "mission accomplished" and now ignore the prior months' themes. You've now proved you can achieve a certain level of performance in that area, and you should reasonably be able to expect that level of achievement going forward. This will take some education, reminders and maybe some residual incentives to accomplish. For instance, if you hit a target when it is the monthly theme, each person gets a reward. Going forward, each time you hit that same target again, they may get a smaller reward PLUS the reward for the current month's theme. Do what it takes to avoid backsliding once you’ve worked hard to achieve a target.
• Targets can be operational (like the examples above) or financial (revenue, overhead expense, profit), but many employees will more readily understand and relate to operational measures. Using financial measures is good but plan on doing much more training to make them meaningful to your staff.
• Choose themes that are critical to moving the operation forward – drive out a weakness, capitalize on a strength or an opportunity, and so on.
• Consider having 12 themes - one for each month. Repeat every year, and change the targets and rewards as appropriate.
• Rewards can be money or non-cash, like movie tickets, food, or gift cards. Mix it up.
• Keep the rewards in proportion to the target. Try to make this program "self-funding" - which means the benefit derived outweighs the cost of rewards. This is not always possible in the short term, but don't get carried away with big rewards.
• Use the program as a teaching tool. It’s a great opportunity to teach your employees how the business works, how to help it succeed, grow and make money, and how to solve problems. Show the employees a “line of sight” between their work and the target.
• Keep it in the employee's minds. Create excitement and “buy-in” when you roll it out, and use signs, meetings and emails to keep it front and center as you go along.
• Keep everything comic book simple! Make it simple for employees to understand and easy for you to administer.

A program like this takes a fair amount of thought and work to implement. It should not take a lot of work to run once it's in place. Consider having the employees measure their own results. In fact, have them create their own “scoreboards.” Tracking their own results like this has many benefits. It gets and keeps them involved, they learn about the business, and it adds fun to the equation.

Done right and tailored to your company’s workforce, your employee incentive program can increase revenue, productivity and profits while reducing waste and employee turnover.